Waste management company Casella (NASDAQ:CWST) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 23.4% year on year to $465.3 million. The company’s full-year revenue guidance of $1.83 billion at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.36 per share was 10.1% above analysts’ consensus estimates.
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Casella Waste Systems (CWST) Q2 CY2025 Highlights:
- Revenue: $465.3 million vs analyst estimates of $454.4 million (23.4% year-on-year growth, 2.4% beat)
- Adjusted EPS: $0.36 vs analyst estimates of $0.33 (10.1% beat)
- Adjusted EBITDA: $109.5 million vs analyst estimates of $111.9 million (23.5% margin, 2.1% miss)
- The company lifted its revenue guidance for the full year to $1.83 billion at the midpoint from $1.79 billion, a 2.2% increase
- EBITDA guidance for the full year is $417.5 million at the midpoint, below analyst estimates of $421.6 million
- Operating Margin: 4.1%, down from 6.1% in the same quarter last year
- Free Cash Flow was -$11.29 million, down from $41.92 million in the same quarter last year
- Market Capitalization: $6.88 billion
“We delivered strong growth again in the second quarter across our key financial metrics, as we continue to execute on our operating plans and acquisition strategy, including six acquisitions completed in the first half of this year with over $90 million in annualized revenue,” said John W. Casella, Chairman and CEO of Casella Waste Systems,
Company Overview
Starting with the founder picking up garbage with a pickup truck he purchased using savings from high school, Casella (NASDAQ:CWST) offers waste management services for businesses, residents, and the government.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Casella Waste Systems’s sales grew at an incredible 17.6% compounded annual growth rate over the last five years. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Casella Waste Systems’s annualized revenue growth of 24% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Casella Waste Systems reported robust year-on-year revenue growth of 23.4%, and its $465.3 million of revenue topped Wall Street estimates by 2.4%.
Looking ahead, sell-side analysts expect revenue to grow 8.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and suggests the market is forecasting some success for its newer products and services.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Casella Waste Systems was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.3% was weak for an industrials business. This result is surprising given its high gross margin as a starting point.
Looking at the trend in its profitability, Casella Waste Systems’s operating margin decreased by 4.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Casella Waste Systems’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.
This quarter, Casella Waste Systems generated an operating margin profit margin of 4.1%, down 2 percentage points year on year. Since Casella Waste Systems’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Casella Waste Systems’s EPS grew at an unimpressive 6.4% compounded annual growth rate over the last five years, lower than its 17.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Diving into the nuances of Casella Waste Systems’s earnings can give us a better understanding of its performance. As we mentioned earlier, Casella Waste Systems’s operating margin declined by 4.7 percentage points over the last five years. Its share count also grew by 30.9%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Casella Waste Systems, its two-year annual EPS growth of 6.2% is similar to its five-year trend, implying stable earnings.
In Q2, Casella Waste Systems reported adjusted EPS at $0.36, up from $0.22 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Casella Waste Systems’s full-year EPS of $1.23 to shrink by 2.8%.
Key Takeaways from Casella Waste Systems’s Q2 Results
We enjoyed seeing Casella Waste Systems beat analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. On the other hand, its EBITDA missed and its full-year EBITDA guidance fell slightly short of Wall Street’s estimates. Overall, this print was mixed but still had some key positives. The stock traded up 1.2% to $110 immediately after reporting.
Should you buy the stock or not? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.